The #startup landscape in India is expanding rapidly, but the key concern remains: How successful and sustainable are these ventures?
Here's Mallica Mishra with the answer.
For the latest news and updates, visit: ndtvprofit.com
Here's Mallica Mishra with the answer.
For the latest news and updates, visit: ndtvprofit.com
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TVTranscript
00:00 Hello and welcome to NDTV Profit.
00:03 Last week, the government announced the interim budget and its intention to make India a developed
00:07 nation by 2047.
00:09 While the road to being a developed country involves many imperative factors at play,
00:15 the startup industry is one space that has been significantly contributing to the country's
00:20 robust economy.
00:22 The startup ecosystem at present in India comprises 111 unicorns with a combined valuation
00:28 of nearly $350 billion.
00:32 This number is expected to multiply in the coming years as we turn from a developing
00:37 to a developed nation.
00:39 But there is a question.
00:41 How successful and sustainable are these startups?
00:45 Are there lessons to learn from their hits and misses?
00:48 We have some solid examples of damage to doubt, the potential and strength of this space.
00:56 Number one, let's consider the case of Vijay Shekhar Sharma's Paytm.
01:01 The company's questionable practices include onboarding customers without proper KYC, associating
01:07 thousands of customers with a single PAN, and maintaining multiple dormant accounts
01:13 ostensibly for potential money laundering.
01:16 As a result, regulatory crackdowns have led to a staggering $2 billion worth of erosion
01:23 in investor wealth in just two days.
01:26 Paytm stocks are plummeting, affecting millions of investors.
01:31 The Paytm IPO, originally priced in the range of Rs. 2080 to 2150, now trades at just Rs.
01:42 487.
01:44 Another example is the once-celebrated Edtech company, Byjuice.
01:47 In a few short years, the company's valuation skyrocketed from $1 billion in 2018 to an
01:54 astounding $22 billion by 2022, fueled by aggressive expansion strategies and relentless
02:01 acquisitions.
02:02 However, as the company poured millions into marketing campaigns, including the high-profile
02:08 signing of Lionel Messi as a brand ambassador, concerns regarding financial practices and
02:14 governance surfaced.
02:17 Investors complained of subpar products and services, while employees suffered in a toxic
02:21 work environment.
02:23 The absence of required financial statements further raised doubts about the company's
02:28 true worth.
02:30 The valuation has now plummeted by nearly 99%, leaving marquee investors in despair.
02:38 Next we have Bharatpay.
02:39 Bharatpay filed a criminal complaint with the Economic Offences Wing in 2022, citing
02:46 17 accounts, including embezzlement, forgery, and criminal breach of trust.
02:52 Accusations included the Grover family raising fake invoices with initial invoices from five
02:59 firms linked to Grover's family, allegedly siphoning off funds from the fintech company
03:05 for fictitious recruitment services.
03:09 Registered addresses of all eight alleged HR firms belonged to family members.
03:16 Approximately Rs 7.6 crore was found credited to these firms, despite them not assisting
03:23 in recruiting any employees.
03:25 A 2,800-page civil suit unveiled a web of fake bills and misappropriation of company
03:32 funds for personal use.
03:35 Madhuri Jain, Ashne Grover's wife and the former head of controls at Bharatpay, approved
03:41 payments totalling Rs 72 crore to 30 third-party vendors who allegedly provided no real services
03:49 or goods to the company.
03:52 Furthermore, contracts for office renovation were awarded to Jain's own interior design
03:57 firm, Mauve and Brown, without proper disclosure.
04:02 The company also covered personal trips for the Grover family to foreign locations, sometimes
04:08 even paying twice for the same trip through different agencies.
04:14 Inflating books was another trick employed by startup firm Go Mechanic.
04:19 Amit Bhasin, co-founder of the automobile after-sales service startup, admitted to errors
04:25 in financial reporting leading to a forensic audit and a significant restructuring that
04:30 saw 70% of the 1,000-odd workforce being laid off.
04:35 Almost two years after securing a massive $42 million in funding, it was revealed that
04:42 Go Mechanic had manipulated its financial records to inflate revenue numbers.
04:49 A conflict of interest was seemingly bypassed when online food delivery platform, Zomato,
04:54 acquired the quick commerce grocery delivery platform, Blinkit, for Rs 4,447 crore in an
05:02 all-stock deal.
05:03 This acquisition raised concerns as Zomato's balance sheet appeared ill-suited for such
05:08 a move.
05:09 Furthermore, Albinder Dhinsa, the CEO of Blinkit, previously held a key role in Zomato and is
05:18 the spouse of Zomato's co-founder and former CFO, Akriti Chopra.
05:23 The lessons for all of us are clear.
05:26 Not everything that glitters is gold.
05:29 Regulators must exercise vigilance not only in the listed space but also with unlisted
05:35 companies that attract billions of dollars from prominent investors.
05:40 After all, the reputation of India as an investment destination is at stake.
05:44 [Music]